The Main Payment Structures for Affiliates (Plus Other Considerations)

20 years ago affiliate marketing was in its infancy.  It wasn’t easy to find a good program.

Fast forward to today and almost every major company has an affiliate program or some way to promote them as an affiliate.  It’s become a mainstream sales source for many businesses selling online.

That’s great for us who are publishing websites.  We have no shortage of options.

What that does leave us with is figuring out which merchants to promote.  There are many factors involved.  This article focuses on the affiliate payment structures followed by payment methods and many other considerations.

Affiliate Marketing Payment Structures

The sole interest of an affiliate marketer is to earn. Getting the right payment structure to work for you is easy as ABC once you know what to be on the lookout for.

Choosing the wrong payment structure can be disappointing. It is recommended to do thorough research on all businesses in your niche as the payment methods and commissions vary.

Here are various affiliate partner payouts worth noting.

Pay per Sale

Pay per sale is a payment structure which many affiliates deem standard. However, to some extent, it may be discouraging. A consumer may visit the sellers’ website via your link and leave without purchasing. In this case, you don’t earn any commission since commission payment depends on sales.

Unless you are confident that you are convincing enough in your strategies, this structure isn’t for you. After all, no one wants to leave empty-handed after a challenging task.

Pros

• For product owners, it’s cost-effective.
• You can track progress.
• It saves you time as a brand.

Cons

• For affiliates, it may be tricky if consumers fail to buy.
• Not all clicks lead to a sale.

Pay per Lead

Also known as Cost per action, in this structure, a product owner pays for all the traffic directed to their website, whether it results in a sale or not. Unlike in pay per sale structure, this model is about luring consumers to visit sellers’ websites. Regardless of whether they will make a purchase or not, you are already on the payroll after your affiliate link leads them there.

Even though it sounds simple, you still need to be convincing enough. Once consumers are on the merchants’ site, they ought to complete an action for you to be eligible for payment. The step may be as simple as filling in a contact form. Also, they may need to enroll for a particular email.

As compared to the pay per sale structure, this program is highly recommended as it’s easy to earn.

Pros

• It’s easy to earn for affiliates since a consumer doesn’t have to buy for you to earn your commission.
• For brands, it’s easy to track progress.
• Can help you set goals
• This structure is predictable.

Cons

• Specialist knowledge is needed.
• Many web users don’t click on the leads, and even if they do, they don’t complete the desired action like filling forms.
• Expensive and competitive.
• Time-consuming. To run a successful campaign, you need to check progress regularly. 

Pay per Click

Web traffic here is critical. An increase in web traffic may see you earn a handsome amount in this structure. However, as it is in other formats, hard work is a must. Being persuasive helps.

As an affiliate marketer, you are supposed to create links to redirect your visitors to the merchants’ web page. The more traffic you drive, the more you earn.

In all payment structures, influence is paramount. It’s what determines whether a consumer takes the next step. Yearn to create good content that is convincing enough to earn you more and more consumers. 

Pros

• An advertiser doesn’t need to pay for the advert.
• You have financial freedom.
• It is faster, and so are the results.
• It aids in branding. Even if visitors don’t click on the links, it sticks to their mind by seeing it.

Cons

• Not all clicks lead to a sale.
• Your target audience may deem your link irrelevant.

Now that we have discussed the various programs to earn, let us see how you can pocket your earnings.

There are different ways an affiliate receives money. This can be in the form of a direct deposit into your bank account, using your Paypal account, Payoneer, and other financial institutions.

With these, you are sure of receiving your money since most have a tracking link that shows at what stage your deposit is.

Other affiliate payment structure considerations

In addition to the mechanism for triggering a commission, you should be aware of other

Cookie duration:  This can play a big part in your earnings.  The cookie duration means how long after the click on your affiliate link you’ll be credited for sales.  Amazon has a 24 hour duration which is very short. Most offer 30 days.  Some 60 to 120 days.  And then some offer lifetime tracking.

One time: this is most common.  You earn commissions on all purchases within the stipulated cookie duration.  If the merchant offers a 30 day cookie and your referral makes one purchase during that 30 day period, you earn on that sale.  If that same referral purchases again on day 36, you do not earn a commission.

Entire cart: Most merchants pay commissions on ALL products purchased.  Amazon included.  For example, if you review and link to Ziploc bags and then that referral buys a $5,000 TV, you earn a commission on the Ziploc bags and TV.  This is one reason promoting Amazon works well… often people buy a lot of stuff when shopping on Amazon (yours truly included).  However, there may be some merchants out there that only pay for the product linked to. This is rare but watch out for it… because in this case it’s probably best to promote an alternative merchant.

Lifetime: Lifetime commissions are great.  It’s usually restricted to digital product merchants and supplements.  It works like this. You refer Bill who buys supplements. You get a commission.  Bill buys again in 6 months… under a lifetime arrangement, you get another commission. In other words, you earn commissions every time Bill buys for the rest of Bill’s life.  This can be particularly lucrative if the merchant is good at upselling existing customers into more expensive products.  For example, if you refer someone who buys a $27 digital product and then 6 months later they buy a $997 digital product, you earn commissions on both.

Recurring: Recurring is similar to lifetime but it’s referred to subscription-based products such as SAAS software.  This commission structure is far more widespread now than it was years ago with the explosion of SAAS software.  It works like this. You refer Sally to business software that pays recurring commissions. Sally subscribes to the software.  She is charged every month for ongoing use of the software.  You earn a commission every month Sally renews her subscription.  Over time this revenue stream can grow into something substantial.

Commission percentage considerations

When choosing a niche (if affiliate marketing will be central to your strategy) and merchants to promote, you should consider the commission percentage.

Physical products: Amazon now pays very low percentages.  In fact, most ecommerce merchants selling physical products pay fairly low commissions (below 10% and often below 5%).  So don’t expect to earn 30% on appliances, for example.

Digital products such as courses, on the other hand, cost nothing to produce so commissions are way higher.  Commission percentages range from 20% to 75%.

SAAS software falls in the middle.  There are more costs to sell it (servers, staff, etc.) so commissions are typically around 15% to 30%, but many are recurring.

Services:  Yes, some services have affiliate programs as well. The commission rate varies considerably from 5% to 30%.  They aren’t common generally.  But they do exist in some niches.

Conversion rate… test it

Commission rate isn’t the only consideration.  You should consider and test conversion rate.

Some merchants may offer a high percentage but if they don’t sell, what’s the point.

Again, this is why Amazon still succeeds with affiliates and that because Amazon can sell.  It’s a selling machine.  Millions of people buy most of their stuff online from Amazon.  They have Prime accounts so will load up.

That said, I’ve also found that merchants other than Amazon can far outperform Amazon for some products. There are some excellent merchants out there that Amazon can’t beat.

Take clothing as an example.  Anyone who is into fashion and particular about clothing they buy will likely buy from specific merchants instead of Amazon.  Finding clothing on Amazon, if you’re looking for something specific, isn’t always easy.

For example, I like Lululemon athletic wear.  I love it actually.  It fits very well.  It’s highly functional. It’s comfortable. It looks good. I don’t shop for Lululemon on Amazon. I shop on the Lululemon website.

Another example are watches.  Most people looking to buy a higher-end watch won’t do so on Amazon.  Some might but most will go to the watch merchant online and buy.  I buy many smartwatches for one of my sites and this is what I do… I buy most from the individual merchants.

How can you test affiliate offers quickly?

A fast and easy way to test is to use the ConvertBox exit popup form.  You can create split test forms.  Link to different merchants.  See what earned you the most money after 30, 60 or 90 days.  You have your answer.  It’s so simple.

Payment Methods for Affiliates

How do affiliates get paid?

As an affiliate for multiple affiliate networks as well as many merchants individually, I can tell you that the way you get paid will vary quite a bit.

What do I mean by payment method?

I’m talking about how merchants and networks actually get the money into your hands.

10 years ago payment by check was common which was okay but there’ was an added delay for the postal service and then I had to take time to go to the bank.  Living in Canada, it could take weeks just for the two postal systems to get checks into my hands.

I still do get paid by a few merchants by check. Amazon is one of them. Being in Canada, check is my best option.  I also get paid by Clickbank via check.  Being in Canada, check is still my best (or only) option with some merchants.  I believe if you’re in the US, you have digital payment options for Amazon and Clickbank.  I also receive a monthly check from an individual merchant.

These days most merchants pay digitally.

The most common digital payment mechanisms are:

• Paypal
• Direct deposit
• Other payment platforms such as Payoneer.

I receive by far the lion’s share of my affiliate payments via Paypal which I’m very happy with.  I use Paypal to run my business so it works for me.  It’s easy to withdraw the money. It’s easy to receive money.  All in all, it works for me.

How long does it take for affiliates to get paid?

This also varies.

99% of the time you will not get the money immediately. This is exceedingly rare. You might be able to arrange this privately but don’t expect any network or merchant to pay you immediately.

All payments are delayed a specified period.  This makes sense because they must allow for any stipulated refund period.

Typically, payments are net 30, 45, 60 and once in a blue moon 90.

I know it sucks when you’re starting out to have to wait so long but once the payments kick in, assuming you earn commissions regularly, you receive money monthly.

Speaking of regularly payments, how often do affiliates get paid?

After the net period expires, most merchants and affiliate networs pay monthly.  Some, like Clickbank, pay weekly which is unusual.

Paid per Performance ROCKS

You ever hear of the phrase hard work and/or smart work pays? This definitely applies to affiliate marketing.

Depending on the structure you are in, the only sure way to earn is to get results. One the flip side, if you can get great results, you will earn a lot of money. 

Parties Involved In Affiliate Marketing

For this marketing strategy to bear good results, there are parties involved and have specific roles to play to achieve success. 

Product Owner/Seller

A product owner can be either an individual or a company. The product can be a tangible object like an electric gadget or services offered. Without any product marketed, affiliate marketing wouldn’t exist.

In most cases, most sellers aren’t involved in promoting their products directly. Instead, they approach affiliates to advertise on their behalf. 

The Affiliate

The affiliate takes the role of the advertiser. This can be an individual or company doing the advertising. Their central role in this strategy is to persuade. Consequently, they are entitled to a particular payout of the revenue.

Revenue sharing is usually after a successful purchase. Also, it can be after a successful traffic-driving campaign. The conversion rate of traffic determines how much revenue is earned.

It all depends on the agreement the affiliate has with the seller.

Consumers

Here is the most crucial party. Undoubtedly, without consumers, affiliate marketing won’t exist. All efforts revolve around getting as many consumers as possible. They are the sole determinants of success in affiliate marketing. 

Sellers and affiliates must make all efforts to ensure that they meet the consumer’s needs lest they don’t earn. This is made possible through websites and social media accounts to get the consumer interested in featured products or services. If the consumer goes ahead and purchases from the link, there is a profit. Later, the affiliate and the product owner share the revenue. 

What’s the best structure?

A few years ago I would have said recurring commissions are the best.

While I still love recurring commissions, not all niches offer that.

These days my favorite commission structure boils down to what works.

I operate in the fashion and smartwatch niches.  I promote clothing, footwear and watches.  They pay low commissions but it still pays.

Some folks choose a niche based on the affiliate opportunities.

I prefer choosing a niche based on topics I know that I can do well as in I’m able to publish outstanding content.  This is key for me.  I’m not great in all niches but there are some niche where I seem to have a knack for doing a very good job.  Those are my favorite niches and then within the niche I look for affiliate opportunities.

That said, I still earn by far the most of my revenue from website display ads. I love ad monetization.